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Trust Administration

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Trust Administration in Arizona is the process of administering the directions in the trust once the Trustmaker has either passed away or has become incapacitated. A well-designed trust will have many provisions regarding administration for both of the above events. During incapacity, the Successor trustee will be charged with preserving and maintaining the trust assets for the benefit of the TrustMaker. After the Trustmaker has passed away, the Successor Trustee is charged with gathering and evaluating the trust assets, preserving their value, and ultimately distributing the assets to the listed beneficiaries while following the rules that were initially set up in the Revocable Living Trust.

The first step to administering a trust is to read the original trust document, and to understand the rules and terms that are present in that document. This can be an arduous task, as trusts are often written in legalese and can be difficult to understand. For this reason, it is often beneficial to at least speak with an attorney before tackling the job of administering a trust.

Once the document is reviewed and the terms are understood, it is time to put those terms in motion. The first step is to notify heirs that they are listed in the trust, and to provide them with a copy of the pertinent portions of the trust that apply to them. This must be done quickly as state law has a built-in deadline for this action. The next step is to pay expenses and creditors.

While the trust being administered should be written and funded so that we can avoid having to go to probate court, it may still be beneficial to post notice to creditors via publication. This does not require us to go to court. However, this will relieve the trustee of liability for distributing assets without paying creditors. If a Successor Trustee fails to pay expenses or creditors, then they may be found liable for any money distributed that should have gone to expenses or creditors. This is easily avoided by notifying creditors and ensuring that expenses get paid.

The final step is to administer the trust according to the terms of the original document. If there are assets remaining in trust after expenses and creditors are paid, then we must follow the rules of the trust to deliver the remaining assets to the beneficiaries. This may be as simple as giving the assets to the beneficiaries outright, or it may require us to create Beneficiary Asset Protection Trusts. If so, then the Successor Trustee will need to create the trusts, get Employer Identification numbers, and open accounts for the trust.

The Successor Trustee is also responsible for filing and paying an estate tax return with the Internal Revenue Service if one is due. Once all items are distributed, and the tax return is filed and marked as final, then the administration may be closed.

Trust Administration is an integral part of the Estate Planning Process. It is of the utmost importance that you designate someone you trust to be Successor Trustee, as they will be in charge of ensuring that your final wishes are executed.